It was no surprise that the findings in the Michael and Susan Dell Foundation’s “A Philanthropist’s Guide to the Future” echo themes in impact investing. The report shares research on trends and opportunities in work for social change, and it encourages philanthropists to increase their engagement with market-based innovations.
The report highlights shifts that are changing the face of philanthropy. One shift is in the motivation to work in social change. In addition to passion, the research found that pragmatism is rising in importance. With this shift comes increasing interest in market-based innovation – 62% of respondents to their survey indicated that in the coming decade, the best social impact ideas will come from social enterprise.
A related shift is in approach – philanthropists are pursuing innovation, not just staging interventions. The report encourages philanthropists to embrace their unique ability to take risks and provide seed funding for new solutions including market-based ones. This is reflective of the work of IC member, Laura Kind McKenna, a Trustee and Treasurer of the Patricia Kind Family Foundation (PKFF). Laura is an active proponent of mission-related investing by foundations. She recently shared her pioneering spirit on a virtual member meeting.
PKFF has invested more than $30 million in grants and program-related investments in the Philadelphia region, believing that their investment assets and grant making should be in service of the mission. “Foundations should not leave assets on the sideline, or even working against their mission,” she says. McKenna also stressed the value that philanthropists bring to the investment table – often a deeper understanding of the challenge being addressed and a strong commitment to impact alongside financial return. She encourages philanthropists to engage with an impact investing group, such as Investors’ Circle, and to start by taking a single step, perhaps with an investment in a local Community Development Financial Institution (CDFI), or by considering structuring a grant as a loan, if appropriate. You may learn more from Laura here.
Additionally, the Dell Foundation report notes some overarching changes in philanthropy. “The points of entry have grown more diverse, the attitudes more humble and inclusive, the tactics more sophisticated.” So goes the impact investing field: we see approaches across asset classes creating multiple entry points, an increasing understanding of the importance of diverse experiences in innovation and leadership, and evolving tools that recognize the diversity of growth trajectories.
With these positive developments, we are also seeing increased complexity. For many new entrants, including philanthropists, the impact investing space is confusing and difficult to navigate. This calls for more coordination and a better road map. As such, I’m proud to share that Investors’ Circle is a Co-Founding Partner of SOCAP’s Good Capital Project. This two-year effort will drive greater collaboration and address key challenges in the impact investing industry. The initiative kicks off on June 19 in New York, and I invite you to join me – IC members may use code GC_InvestorsCircle to receive a 15% discount off registration. I’m looking forward to working with you and colleagues to increase the flow of capital to purpose-driven investments!